B40 biodiesel program will be implemented in Indonesia next year

20-Dec-2024 01:46 PM

The Indonesian government has announced that starting January 1, 2025, the country will implement the B40 biodiesel program, which mandates that 40% of the biodiesel produced in Indonesia must be derived from edible oils, primarily palm oil.

This move is part of Indonesia's ongoing efforts to promote renewable energy and support the palm oil industry, which the country is the largest producer and exporter of.

To accompany this new policy, the government is also planning to raise the export levy on crude palm oil (CPO) by 10%. The new export levy is currently awaiting finalization under the Ministry of Finance, with a decision expected soon.

The implementation of the B40 program has raised concerns within the Indonesian palm oil industry. The Indonesian Palm Oil Association (Gapki) has warned that this increase in domestic palm oil consumption might negatively impact the export of palm oil products unless domestic production increases in line with the additional demand.

Currently, Indonesia operates a B35 biodiesel program, and the shift to B40 would further intensify the need for palm oil domestically.

In addition to the biodiesel program, the government has been focusing on encouraging the export of refined palm oil products, rather than crude palm oil, to boost the domestic refining industry.

To achieve this, the export duties and levies on crude palm oil are being kept high, which in turn increases the domestic demand for CPO as more refined palm oil and palmolein are exported.